City of Weston, West Virginia Policemen’s Pension and ...mpob.wv.gov/actuarialreports/Documents/Weston_Police_07012017.pdfMs. Dodie Arbogast and Chief Josh P. Thomas City of Weston

City of Weston, West Virginia Policemen’s Pension and Relief Fund Actuar ia l Va luat ion Report for the Year Beginning Ju ly 1 , 2017

September 26, 2018 Ms. Dodie Arbogast Chief Josh P. Thomas Finance Manager Pension Board Secretary 102. W. Second Street City of Weston Policemen’s Pension and Relief Fund Weston, WV 26452 Subject: City of Weston Policemen’s Pension and Relief Fund Actuarial Valuation Report for the Year Beginning July 1, 2017 Dear Ms. Arbogast and Chief Thomas: Upon the request of the Municipal Pensions Oversight Board, we have performed an actuarial valuation as of July 1, 2017, for the City of Weston, West Virginia Policemen’s Pension and Relief Fund (“Fund” or “Plan”). This actuarial valuation has been performed in accordance with the West Virginia Code Chapter 8, Article 22, Sections 16 through 28, inclusive.

In accordance with West Virginia Code §8‐22‐20, this actuarial valuation report provides information on:

The sponsor’s funding requirements for the fiscal year ending June 30, 2019;

The Fund’s eligibility to receive an allocation of the premium tax for the fiscal year ending June 30, 2019; and

The Fund’s eligibility to provide supplemental benefits for the plan year beginning July 1, 2019. West Virginia Code §8‐22‐20(c)(4) requires (1) a review of the actuarial assumptions and methods at least once every five years and (2) that the Actuary shall provide a report to the oversight board with recommendations on any changes to the actuarial process. Consequently, an experience review was performed for the period July 1, 2009, through June 30, 2014. The assumptions and methods were recommended by the actuary, in the report 2016 Experience Review for the Years July 1, 2009, to July 1, 2014, approved by the Municipal Pensions Oversight Board, and became effective for the actuarial valuation as of July 1, 2015. This report is based on the sponsor’s election to finance benefit obligations using the Optional funding policy as defined in West Virginia Code §8‐22‐20 (e)(1). This valuation is based upon:

Plan Member Data – Data for active members and persons receiving benefits from the Fund as of June 30, 2017, was provided by the Fund’s staff. We have tested this data for reasonableness.

Ms. Dodie Arbogast and Chief Josh P. Thomas City of Weston Policemen’s Pension and Relief Fund Page 2

Asset Values – A reconciliation of market value of assets during the plan year ended June 30, 2017, and assets held as of June 30, 2017, by investment category, was provided by the Fund.

Plan Provisions – A summary of the key plan provisions valued are set forth in Section VI of the report: Summary of Principal Plan Provisions.

Actuarial Methods – Fund liabilities were measured using the Entry‐Age Normal Actuarial Cost Method. The actuarial valuation was based on the market value of assets. The actuarial methods used in the actuarial valuation are set forth in Section V of the report: Actuarial Assumptions and Methods.

Actuarial Assumptions – The actuarial assumptions used include a discount rate of 6.00%. The assumptions used in the actuarial valuation are set forth in Section V of the report: Actuarial Assumptions and Methods.

The actuarial valuation results disclosed in this report are based on the data and actuarial assumptions and methods described above, and upon the provisions of the Plan as of the actuarial valuation date. Based on these items, we certify these results to be true and correct.

To the best of our knowledge, this actuarial statement is complete and accurate, and has been prepared in accordance with generally accepted actuarial principles and practices.

Future actuarial measurements may differ significantly from the current measurements presented in this report due to such factors as the following: plan experience differing from that anticipated by the economic or demographic assumptions; changes in economic or demographic assumptions; increases or decreases expected as part of the natural operation of the methodology used for these measurements (such as the end of an amortization period or additional cost or contribution requirements based on the plan’s funded status); and changes in plan provisions or applicable law.

This report should not be relied on for any purpose other than the purpose stated.

The signing actuaries are independent of the plan sponsor.

Alex Rivera and Lance J. Weiss are Members of the American Academy of Actuaries (MAAA) and meet the Qualification Standards of the American Academy of Actuaries to render the actuarial opinion herein.

Sincerely,

Alex Rivera, FSA, EA, MAAA, FCA Lance Weiss, EA, MAAA, FCA Senior Consultant Senior Consultant

Contents

City of Weston Policemen’s Pension and Relief Fund i

Section Pages Items Transmittal Letter I Actuarial Valuation Results as of July 1, 2017 1‐5 Executive Summary of Valuation Results as of July 1, 2017 6 Schedule A: Summary of Key Valuation Results 7 Schedule B: (Gain)/Loss Analysis II Actuarial Projections 1‐5 Optional Funding Policy Projections III Actuarially Determined Contribution for GASB 67/68 Reporting 1 Schedule C: Funding Progress and Employer Contributions IV Actuarial Valuation Data as of July 1, 2017 1 Schedule D: Reconciliation of Assets 2 Schedule E: Assets Held by Category 3 Schedule F: Summary of Participant Activity 4 Schedule G: Distribution of Actives 5 Schedule H: Participants Summary V 1‐5 Actuarial Assumptions and Methods VI 1‐2 Summary of Principal Plan Provisions

SECTION I

ACTUARIAL VALUATION RESULTS AS OF JULY 1, 2017

Actuarial Valuation Results as of July 1, 2017 Executive Summary

City of Weston Policemen’s Pension and Relief Fund I‐1

Upon the request of the Municipal Pensions Oversight Board, we have performed an actuarial valuation as of July 1, 2017, for the City of Weston, West Virginia Policemen’s Pension and Relief Fund (“Fund” or “Plan”). In accordance with West Virginia Code §8‐22‐20, this actuarial valuation report provides information on:

The sponsor’s funding requirements for the fiscal year ending June 30, 2019;

The Fund’s eligibility to receive an allocation of the premium tax for the fiscal year ending June 30, 2019; and

The Fund’s eligibility to provide supplemental benefits for the plan year beginning July 1, 2019. This report is based on the sponsor’s election to finance benefit obligations using the Optional funding policy as defined in West Virginia Code §8‐22‐20 (e)(1). The sponsor changed the funding policy used to determine contributions from the Standard funding policy to the Optional funding policy, effective January 5, 2015. The key features of the Optional funding policy, effective for plan years beginning after January 1, 2010, for plans previously financing benefits with the Standard funding policy, are summarized below;

The current local Plan is closed to new employees

New employees are covered in the multiple employer statewide plan – Municipal Police Officers and Firefighters Retirement System

Benefits and expenses in the closed local Plan are financed by contributions made from the following sources:

o Employee contributions of 7.0% of pay for members hired before January 1, 2010, increased by up to 2.5% of pay if elected by the Board of trustees of the Plan. Employees hired after January 1, 2010, contribute 9.5% of pay;

o The premium tax allocation assigned to the Fund for the plan year; and

o Employer contributions equal to the normal cost, net of employee contributions, plus a 40‐year closed period amortization from July 1, 1991 (14 Years remaining as of July 1, 2017) on a level dollar basis, of the unfunded actuarial accrued liability net of premium tax allocation applicable to the plan year.

Actuarial Valuation Results as of July 1, 2017 Executive Summary (Continued)


The following table provides the Plan’s funded status:

Funded Status as of: July 1, 2017

Assets $1,302,067

Actuarial Accrued Liability $1,489,741

Unfunded Actuarial Accrued Liability $187,674

Funded Ratio 87.40%

The following table provides the estimated employer contributions for the fiscal year ending June 30, 2018, under the Optional funding policy, which was developed using the results of the actuarial valuation as of July 1, 2016:

Employer Contributions for FYE: June 30, 2018

Estimated Payroll for PYE 06/30/2017 $195,405

Employer Normal Cost for PYE 06/30/2017 $71,875

Employer Normal Cost Rate for PYE 06/30/2017 36.8%

Amortization of Unfunded Actuarial Liability for PYE 06/30/2017 $44,568

State Insurance Premium Tax Allocation for FYE 06/30/2018 $52,510

Estimated Employer Contribution for FYE 06/30/2018 ᵃ $71,875

The following table provides the estimated employer contributions for the fiscal year ending June 30, 2019, under the Optional funding policy, which was developed using the results of the actuarial valuation as of July 1, 2017:

Estimated Employer Contributions for FYE: June 30, 2019

Estimated Payroll for PYE 06/30/2018 $123,429

Employer Normal Cost for PYE 06/30/2018 $29,942

Employer Normal Cost Rate for PYE 06/30/2018 24.3%

Amortization of Unfunded Actuarial Liability for PYE 06/30/2018 $19,611

State Insurance Premium Tax Allocation for FYE 06/30/2019 $61,409

Estimated Employer Contribution for FYE 06/30/2019 a $29,942

a The Employer Contribution cannot be less than the Employer Normal Cost.

The actual minimum employer contribution for fiscal year ending June 30, 2019, will be based on the actual payroll for the plan year end June 30, 2018.



Commentary on Premium Tax Allocation

Under §8‐22‐19 of the West Virginia Code, the plan sponsor is required to deposit the statutory contribution on a monthly basis at a rate of one‐twelfth of the annual requirement, in order to receive the premium tax allocation from the Municipal Pensions Security Fund. Revenues which are specifically collected for the Fund, including employee payroll contributions, must be deposited within five days of receipt. Based upon discussions with the Municipal Pensions Oversight Board (MPOB), we understand the annual premium tax allocation is determined by September 1st each year. Municipalities can begin invoicing the MPOB for their share of the premium tax allocation after receiving their state provided actuarial study and after the municipality has made employer contributions to the local Plan. Each municipal treasurer shall use the invoice template provided by the MPOB to begin drawing down the state allocation for the municipal pension plan. This July 1, 2017, Actuarial Report from GRS is to be used by municipal pension plans to draw down the September 1, 2018 State Premium Tax Allocation which is allocated in Fiscal Year 2019. The actuarial valuation and projection results assume the sponsor will make the statutory contributions on a monthly basis in accordance with statutes, and will be eligible to receive the premium tax allocation.

Commentary on Solvency Projections and Supplemental Benefits

Under § 8‐22‐26a of the West Virginia Code, all retirees, surviving spouses and disabled pensioners are eligible for Supplemental Benefits that include automatic cost‐of‐living benefits commencing on the first day of July following two years of retirement. The benefit equals the percentage increase in the Consumer Price Index, limited to 4.0 percent (2.0 percent for certain disabled pensioners), multiplied by the sum of the allowable amount (first $15,000 of initial benefits paid) and the accumulated supplemental pensions paid in prior years. The Court of Appeals decision requires that Supplemental Benefits be provided on “the allowable amount of the first $15,000 of the total annual pension paid in addition to the accumulated supplemental pension from the previous years.” The decision implies that compound cost‐of‐living increases should be applied to both the allowable amount of $15,000 and the accumulated supplemental pension amounts for prior years. Additional Supplemental Benefits are payable only if the Plan satisfies the minimum standard for actuarial soundness as defined in West Virginia Code § 8‐22‐20. This minimum standard requires that the fund remain “solvent” over the next 15‐year projection period. Based on discussions with the West Virginia Municipal Pensions Oversight Board, and our understanding of the administrative practices of other local police and fire pension funds in West Virginia, the “solvency” requirement generally means that the fund’s market value of assets is projected to be greater than zero for all plan years prior to the end of the 15‐year projection period. The projection is based on the most recent actuarial valuation and assumes the plan sponsor will make contributions according to the funding policy elected by the sponsor as defined by West Virginia Code, including any additional amounts needed to satisfy the 15‐year solvency test on a closed group projection basis. Although the 15‐year solvency test may satisfy the minimum standard for actuarial soundness under the statutes, it is not necessarily consistent with generally accepted actuarial principles.



The City of Weston has elected to fund benefits using the Optional funding policy of financing as defined in West Virginia Code §8‐22‐20 (e)(1). Under this funding methodology, the fund’s market value of assets is projected to be greater than zero for all plan years prior to the end of the 15‐year projection period. Accordingly, this contribution methodology satisfies the minimum standard for actuarial soundness. The Supplemental benefits for plan year beginning July 1, 2019, will be based on the Consumer Price Index for calendar year 2018, and the projected results of the July 1, 2017, actuarial valuation.

Additional Remarks on the Actuarial Valuation Results

Following are additional remarks on the actuarial valuation results as of July 1, 2017:

The assumptions and methods were recommended by the actuary, in the report 2016 Experience Review for the Years July 1, 2009, to July 1, 2014, and approved by the Municipal Pensions Oversight Board and became effective beginning with the actuarial valuation as of July 1, 2015. The key assumptions are fully disclosed in Section V of the report.

The interest rate used to discount liabilities changed from 5.50% for the July 1, 2016 actuarial valuation to 6.00% for the July 1, 2017 actuarial valuation.

o The interest rate assumption was developed by reviewing the Plan’s current funded ratio, the 15‐year projected funded ratio, the ratio of assets to benefits, the percentage of assets allocated to equities and the funding policy selected. The details of the methodology used to select the discount rate are presented in Section V of the report. As of July 1, 2017, the Plan’s funded ratio of 87% (using a testing interest rate of 6.00% for all plans using the Optional funding policy), ratio of assets to benefits of 17.97, equity allocation of 44%, and 15‐year projected funded ratio of 100%, resulted in a discount rate assumption of 6.00%.

o The change in interest rate used to discount liabilities from 5.50% as of July 1, 2016, to 6.00% as of July 1, 2017, decreased liabilities by $119,983.

The Fund experienced an approximate annualized return of 6.30% on the market value of assets during the plan year ended June 30, 2017, which compares to the expected annualized return of 5.50%. The difference in actual versus expected return produced an asset (gain)/loss of ($8,274).

An actuarial valuation is based on the expectation of certain events such as salary increases, retirement, disability, mortality, termination and cost of living increases. Demographic or liability experience (gains)/losses are generated when the actual occurrence of such events differs from the expectation. During the plan year ending June 30, 2017, the fund experienced a net liability (gain)/loss of ($102,812) due to these events.



Optional Funding Following are additional remarks on the actuarial valuation projections under the current funding policy:

Employer contributions to the closed local plan are expected to increase each year from $29,942 for the fiscal year end June 30, 2019 to $40,685 for the fiscal year ending June 30, 2031.

The funded ratio is projected to increase from 87% in 2017 to 100% in 2020. The Optional funding policy is consistent with generally accepted actuarial principles.

This actuarial valuation assumes that the City will be able to make future contributions on a timely basis. The ability of the plan to reach 100% funding by 2020 is heavily dependent on the City contributing the minimum employer contribution calculated under the Optional funding policy each and every year until 2020. We did not perform an analysis of the ability of the City to make future contributions. Such an analysis is not within the scope of our assignment or within our analytical skill set. Failure to receive City contributions on a timely basis could jeopardize the sustainability of the Fund.

Under the Optional funding policy, the following experience could cause City contributions to change during the year:

If the actual return on assets is less than the assumed return of 6.00%, then contributions will generally increase. Conversely, if the actual return is greater than the assumed return, contributions will generally decrease.

If salaries increase by more than assumed, contributions could increase. If salaries decrease by more than assumed, contributions could decrease.

If active members retire sooner than expected, contributions will generally increase. If active members retire later than expected, contributions will generally decrease.

If active members become disabled during the year, contributions could increase.

If retired members die later than expected, contributions will increase. If retired members die sooner than expected, contributions will decrease.

If the general inflation is greater than assumed, supplemental benefits will be greater than assumed and contributions will increase. Conversely, if general inflation is lower than assumed, contributions will decrease.

At least once every five years, GRS performs an experience review analysis and updates the actuarial valuation assumptions. For example, if salary increases were consistently lower than assumed during the experience period, then the salary increase rate would likely be lowered. Or if more members retired than assumed, then the retirement rates would likely be increased. Any change in actuarial assumption will also impact the City’s funded ratio. The objective of a change in assumptions is to reduce the level of experience gains and losses in future actuarial valuations.

Actuarial Valuation Results as of July 1, 2017 Schedule A: Summary of Key Valuation Results


Valuation Date July 1, 2016 July 1, 2017

Valuation Interest Rate 5.50% 6.00%

Cost‐of‐Living Adjustment 2.75% 2.75%

Wage Inflation 3.75% 3.75%

Expected Payroll $195,405 $123,429

Average Pay $39,081 $41,143

Expected Benefit Payments $71,427 $72,461

1. Actuarial Accrued Liability No. No.

(a) Actives 5 $509,105 3 $411,219

(b) Retirees 3 $1,057,876 3 $1,004,993

(c) Survivors 1 $74,237 1 $73,529

(d) Disabled Members 0 $0 0 $0

(e) Deferred Vested Members 0 $0 0 $0

(f) Total 9 $1,641,218 7 $1,489,741

2. Present Value of Future Normal Costs $986,388 $520,804

3. Present Value of Benefits (1(f) + 2) $2,627,606 $2,010,545

4. Market Value of Assets $1,181,721 $1,302,067

5. Unfunded Actuarial Accrued Liability (1(f) ‐ 4) $459,497 $187,674

6. Funded Ratio (4 / 1(f)) 72.00% 87.40%

7. Net Employer Normal Cost

(a) Normal Cost $88,004 $38,929

(b) Administrative Expenses $1,296 $1,614

(c) Gross Normal Cost (a + b) $89,300 $40,543

(d) Employee Contribution Rate a 8.92% 8.59%

(e) Expected Employee Contributions $17,425 $10,601 (f) Net Employer Normal Cost (c ‐ e) $71,875 $29,942

( % of Compensation) 36.78% 24.26%

8. Estimated Minimum Employer Contribution b FYE 2018 FYE 2019 (a) Expected Payroll $195,405 $123,429 (b) Estimated Employer Normal Cost $71,875 $29,942

(c) Employer Normal Cost Rate 36.78% 24.26%

(d) Amortization of Unfunded Actuarial Liability $44,568 $19,611

(e) State Insurance Premium Tax Allocation $52,510 $61,409

(f) Estimated Employer Contributionc (b + d ‐ e) $71,875 $29,942

a Blended rate reflecting 7.0% for members hired before January 1, 2010, and 9.5% for members hired after January 1, 2010.

b Estimated Minimum Employer Contribution is based on Optional funding policy and is assumed to be made in plan year ending June 30, 2019. The actual Minimum Employer Contribution will be based on actual payroll for plan year ended June 30, 2018.

c The Employer Contribution cannot be less than the Employer Normal Cost.

Actuarial Valuation Results as of July 1, 2017 Schedule B: (Gain)/Loss Analysis


Experience (Gain)/Loss for Plan Year Ended June 30, 2017

1. (a) Actuarial Accrued Liability as of 7/1/2016 $1,641,218

(b) Normal Cost due 7/1/2016 $88,004

(c) Interest on (a) and (b) to 6/30/2017 $92,687

(d) Benefit Payments with interest to 6/30/2017 $109,373

(e) Effect of Assumption Changes ($119,983)

(f) Expected Liability at 7/1/2017 [(a) + (b) + (c) ‐ (d) + (e)] $1,592,553

(g) Actual Liability at 7/1/2017 $1,489,741

(h) Liability (Gain)/Loss [(g) ‐ (f)] ($102,812)

2. (a) Market Value of Assets as of 7/1/2016a $1,046,625

(b) Interest on (a) to 6/30/2017 $57,564

(c) Contributions with interest to 6/30/2017 $298,977

(d) Benefit Payments with interest to 6/30/2017 $109,373

(e) Expected Assets at 6/30/2017 [(a) + (b) + (c) ‐ (d)] $1,293,793

(f) Actual Assets at 7/1/2017 $1,302,067

(g) Asset (Gain)/Loss [(e) ‐ (f)] ($8,274)

3. Total (Gain)/Loss [1(h) + 2(g)] ($111,086)

a Adjusted Marked Value of Assets as of 7/1/2016

SECTION II

ACTUARIAL PROJECTIONS

Actuarial Projections Table 1: Total Assets

City of Weston Policemen’s Pension and Relief Fund II‐1

Valuation

Plan Premium Tax Actuarial

Year End Pay Assets Benefit Employer Employee Allocation Investment Assets Accrued Unfunded Funded

30‐Jun Active Status (boy) Payments Expenses Contributions Contributions Contributions Income (eoy) Liability Liability Ratio

2017 3 4 $1,046,625 $106,446 $10,758 $167,563 $19,583 $107,299 $78,201 $1,302,067 $1,489,741 $187,674 87%

2018 3 4 1,302,067 72,461 1,614 71,875 10,601 52,510 79,924 1,442,902 1,544,657 101,755 93%

2019 3 4 1,442,902 71,735 1,606 29,942 10,770 61,409 87,425 1,559,108 1,604,280 45,172 97%

2020 3 4 1,559,108 72,104 1,604 30,455 11,008 47,189 93,988 1,668,040 1,668,040 0 100%

2021 3 4 1,668,040 71,410 1,604 31,902 11,260 0 99,200 1,737,388 1,737,388 0 100%

2022 2 4 1,737,388 71,852 1,610 32,615 11,515 0 103,376 1,811,432 1,811,432 0 100%

2023 2 4 1,811,432 72,329 1,617 33,365 11,766 0 107,834 1,890,452 1,890,452 0 100%

2024 2 4 1,890,452 72,858 1,625 34,082 12,013 0 112,588 1,974,653 1,974,653 0 100%

2025 2 4 1,974,653 73,296 1,634 34,858 12,274 0 117,657 2,064,512 2,064,512 0 100%

2026 2 3 2,064,512 73,805 1,645 35,665 12,557 0 123,066 2,160,350 2,160,350 0 100%

2027 2 3 2,160,350 74,226 1,660 36,530 12,872 0 128,838 2,262,704 2,262,704 0 100%

2028 2 3 2,262,704 74,729 1,678 37,592 13,229 0 135,006 2,372,125 2,372,125 0 100%

2029 2 3 2,372,125 75,729 1,699 38,585 13,610 0 141,582 2,488,474 2,488,474 0 100%

2030 2 3 2,488,474 76,865 1,723 39,646 13,996 0 148,571 2,612,099 2,612,099 0 100%

2031 2 3 2,612,099 76,860 1,749 40,685 14,369 0 156,030 2,744,574 2,744,574 0 100%

2032 1 4 2,744,574 100,671 1,782 34,982 12,439 0 163,047 2,852,589 2,852,589 0 100%

2033 1 4 2,852,589 130,327 1,817 26,431 9,547 0 168,312 2,924,735 2,924,735 0 100%

2034 1 4 2,924,735 143,587 1,858 22,719 8,300 0 172,102 2,982,411 2,982,411 0 100%

2035 1 4 2,982,411 153,731 1,900 20,112 7,431 0 175,158 3,029,482 3,029,482 0 100%

2036 1 5 3,029,482 161,542 1,943 18,290 6,834 0 177,679 3,068,799 3,068,799 0 100%

2037 1 5 3,068,799 167,524 1,987 17,090 6,441 0 179,813 3,102,632 3,102,632 0 100%

2038 1 5 3,102,632 172,382 2,032 16,226 6,172 0 181,664 3,132,280 3,132,280 0 100%

Total AssetsNumber

Actuarial Projections Table 2: Employer Contributions


Valuation Plan Closed Premium Tax Employer

Year End Group Employee Gross Net Employer Amortization Allocation Net Employer Contribution

30‐Jun a

Payroll Contributions Normal Cost Normal Cost of UAAL Contributions Amortization Expenses Closed Plan

2018 $123,429 $10,601 $38,929 $28,328 $19,611 $61,409 $0 $1,614 $29,942

2019 125,523 10,770 39,619 28,849 11,164 47,189 0 1,606 30,455

2020 128,410 11,008 40,563 29,555 5,233 0 0 1,604 31,902 b

2021 131,443 11,260 41,545 30,285 0 0 0 1,604 32,615 b

2022 134,525 11,515 42,531 31,016 0 0 0 1,610 33,365 b

2023 137,570 11,766 43,510 31,744 0 0 0 1,617 34,082 b

2024 140,578 12,013 44,476 32,463 0 0 0 1,625 34,858 b

2025 143,735 12,274 45,490 33,216 0 0 0 1,634 35,665 b

2026 147,141 12,557 46,579 34,022 0 0 0 1,645 36,530 b

2027 150,886 12,872 47,771 34,899 0 0 0 1,660 37,592 b

2028 155,080 13,229 49,104 35,875 0 0 0 1,678 38,585 b

2029 159,532 13,610 50,507 36,897 0 0 0 1,699 39,646 b

2030 164,034 13,996 51,931 37,935 0 0 0 1,723 40,685 b

2031 168,349 14,369 53,312 38,943 0 0 0 1,749 34,982 b

2032 144,523 12,439 45,633 33,194 0 0 0 1,782 26,431 b

2033 108,956 9,547 34,160 24,613 0 0 0 1,817 22,719 b

2034 93,507 8,300 29,161 20,861 0 0 0 1,858 20,112 b

2035 82,669 7,431 25,642 18,211 0 0 0 1,900 18,290 b

2036 75,132 6,834 23,185 16,351 0 0 0 1,943 17,090 b

2037 70,103 6,441 21,540 15,099 0 0 0 1,987 16,226 b

2038 66,584 6,172 20,373 14,201 0 0 0 2,032 15,646 b

Employer Contributions

a Assumes employer makes contributions for the applicable valuation plan year in the following fiscal year. Assumes the Premium Tax allocation is contributed in the

following fiscal year. b Amount required to remain at 100% funded.

Actuarial Projections Graph 1: Liability and Assets – Optional Funding


$0

$1

$1

$2

$2

$3

$3

$4

2017 2022 2027 2032 2037

Millions

Year

Liability and Assets ‐ Optional Funding Market Value of Assets

Actuarial Accrued Liability

Actuarial Projections Graph 2: Funded Ratio – Optional Funding


0%

20%

40%

60%

80%

100%

120%

2017 2022 2027 2032 2037

Year

Funded Ratio ‐ Optional Funding

Actuarial Projections Graph 3: Cash Flow Comparison – Optional Funding


$0

$50

$100

$150

$200

$250

2018 2023 2028 2033 2038

Thousands

Year

Cash Flow Comparison ‐ Optional Funding

State Insurance Premium Tax

Employee Contribution

Employer Contribution

Investment Income

Benefit Payments

SECTION III

ACTUARIALLY DETERMINED CONTRIBUTION FOR GASB STATEMENT NOS. 67 AND 68 REPORTING

Actuarially Determined Contribution for GASB Statement Nos. 67 and 68 Reporting

Schedule C: Funding Progress and Employer Contributions

City of Weston Policemen’s Pension and Relief Fund III‐1

Valuation Date July 1, 2015 July 1, 2016 Valuation Interest Rate 5.50% 5.50%

Cost‐of‐Living Adjustment 2.75% 2.75% Wage Inflation 3.75% 3.75% Actuarial Value of Assets Market Market

Actuarial Cost Method Entry Age Normal Entry Age Normal

Remaining Amortization Period a 16 Years, Level Dollar 15 Years, Level Dollar

Schedule of Funding Progress

Actuarial Valuation Date July 1, 2015 July 1, 2016

1. Market Value of Assets $813,822 $1,181,721

2. Actuarial Accrued Liability $1,431,090 $1,641,218

3. Unfunded Actuarial Accrued Liability (2 ‐ 1) $617,268 $459,497

4. Funded Ratio (1/2) 57% 72%

5. Expected Payroll $220,066 $195,405

6. UAAL as Percentage of Covered Payroll (3/5) 280% 235%

Schedule of Employer Contributions c FYE 2017 FYE 2018

1. Actuarially Determined Contribution

(a) Employer Normal Cost $82,209 $71,875 (b) Amortization of Unfunded Actuarial Accrued Liability $57,442 $44,568

(c) Actuarially Determined Contribution (ADC) (a + b) $139,651 $116,443

2. Employer Contribution $95,354 $71,875 b

3. Premium Tax Allocation $49,857 $52,510

4. Percentage of ADC Contributed [ (2 + 3)/1(c)] 104% 107%

a Suggested amortization policy to comply with GASB Statement Nos. 67 and 68 Standards.

ᵇ Estimated employer contribution for fiscal year end June 30, 2018. Employer Contribution cannot be less than net Employer Normal Cost.c Satisfies the Actuarially Determined Contribution as defined by GASB Statement Nos. 67 and 68.

SECTION IV

ACTUARIAL VALUATION DATA AS OF JULY 1, 2017

Valuation Data as of July 1, 2017 Schedule D: Reconciliation of Assets

City of Weston Policemen’s Pension and Relief Fund IV‐1

Plan Year Ending June 30, 2016 June 30, 2017

A. Market Value of Assets End of Prior Year $813,822 $1,181,721

Adjustment to Market Value of Assets at Beginning of Year $118,733 ($135,096)

Market Value of Assets Beginning of Year $932,555 $1,046,625

1. Revenue During Fiscal Year

(a) Employee Contribution $29,258 $19,583

(b) Governmental Contribution

(i) From Local Government $82,614 $95,354

(ii) From State Government $55,183 $49,857

(iii) Reallocation from State Government $0 $0 (iv) Total $137,797 $145,211

(c) Earnings on Investments

(i) Net Appreciation/(Depreciation) $2,334 $41,702

(ii) Bond Interest $5,862 $4,950 (iii) Dividends $22,509 $25,760

(iv) Net Realized Gain (Loss) on Sale/Exchange ($7,939) $5,789

(v) Other $0 $0

(vi) Less Investment Expense $0 $0 (vii) Total $22,766 $78,201

(d) Other Revenue $0 $0

(e) Receivable Investment Income/(Expense) $0 $0

(f) Receivable Contribution a

(i) From Employee Contributions $0 $0

(ii) From Local Government $85,354 $72,209

(iii) From State Government $49,857 $57,442 (iv) Total $135,211 $129,651

(g) Total Revenue (sum of (a) through (f)) $325,032 $372,646

2. Expenditures During Fiscal Year

(a) Benefits Paid $67,226 $95,951

(b) Withdrawals $0 $10,495

(c) Administrative Expenses $8,640 $10,758 (d) Payable Benefits and Withdrawals $0 $0

(e) Payable Administrative Expenses $0 $0

(f) Total Expenditures (sum of (a) through (e)) $75,866 $117,204

B. Market Value of Assets End of Year

[A + 1(g) ‐ 2(f)] $1,181,721 $1,302,067

C. Approximate Return on Assets 1.44% 6.30%

a Receivable contributions for each respective plan year ending.

Valuation Data as of July 1, 2017 Schedule E: Assets Held by Category


Plan Year Ending June 30, 2016 June 30, 2017

1. Cash and Short‐term Investments $295,441 25% $140,916 11%

2. Government Securities

(a) US Treasury Bills, Notes and Bonds $76,060 $49,967

(b) US State and Local Governmental Debt Securities $27,679 $0

(c) Foreign Governmental Debt Securities $0 $0

(d) Other $0 $26,686 (e) Total Government Securities (sum of (a) through (d) ) $103,739 9% $76,653 6%

3. Corporate Fixed Income

(a) US Bonds $0 $0

(b) US Mortgage or other Asset Backed Securities $0 $0

(c) US Mutual Fund Shares (Bonds) $379,602 $381,249

(d) US Exchange Traded Funds (Bonds) $0 $0

(e) International Bonds $0 $0

(f) International Mutual Fund Shares (Bonds) $0 $0

(g) International Exchange Traded Funds (Bonds) $0 $0

(h) Total Corporate Fixed Income (sum of (a) through (g) ) $379,602 32% $381,249 29%

4. Corporate Equity

(a) US Equity $0 $0

(b) US Mutual Fund Shares (Equity) $267,728 $572,824

(c) US Exchange Traded Funds (Equity) $0 $0

(d) International Equity $0 $0

(e) International Mutual Fund Shares (Equity) $0 $0

(f) International Exchange Traded Funds (Equity) $0 $0 (g) Total Corporate Equity (sum of (a) through (f) ) $267,728 23% $572,824 44%

5. Alternative Investments

(a) Real Estate Investment Trust $0 $0

(b) Private Equity Fund $0 $0

(c) Hedge Funds $0 $0

(d) Other Alternative Investments $0 $0

(e) Total Alternative Investments (sum of (a) through (d) ) $0 0% $0 0%

6. Other $0 0% $0 0%

7. Receivable Contributions

(a) From Employee Contributions $0 $0

(b) From Local Government $85,354 $72,209 (c) From State Government $49,857 $57,442

(d) Total Receivable Contributions (sum of (a) through (c) ) $135,211 11% $129,651 10%

8. Accruals

(a) Receivable (other than State and Local Contributions) $0 $774

(b) Less Payable $0 $0

(c) Total $0 0% $774 0%

Market Value of Assets End of Year $1,181,721 $1,302,067

[ sum of (1) through (8) ]

Valuation Data as of July 1, 2017 Schedule F: Summary of Participant Activity


Deferred Spouses and

Actives Retirees Disabled Vested Beneficiaries Totals

Total Participants July 1, 2016: 5 3 0 0 1 9

New Actives: 0

Returned to Actives Status: 0

Data Corrections/Other Changes: 0

Vested Terminations: 0

Non‐Vested Terminations: (2) (2)

Disabled: 0

Retirements: 0

Deaths with Beneficiary: 0

Deaths w/o Beneficiary: 0

Expired Annuity or Stop Payment: 0

Net Changes: (2) 0 0 0 0 (2)

Total Participants June 30, 2017: 3 3 0 0 1 7

Valuation Data as of July 1, 2017 Schedule G: Distribution of Active Employees by Age and Length of Service


Attained Valuation

Age Less than 1 1‐4 5‐9 10‐14 15‐19 20‐24 25‐29 30‐34 Over 35 Totals Payrolla

Under 20 0 $

20‐24 0 $

25‐29 1 1 38,534 $

30‐34 0 $

35‐39 1 1 2 84,133 $

40‐44 0 $

45‐49 0 $

50‐54 0 $

55‐59 0 $

60‐64 0 $

65‐69 0 $

Over 70 0 $

Totals 0 1 1 0 1 0 0 0 0 3 122,667 $

32.5 years

8.7 years

$40,889 a

aBased on payroll at beginning of plan year.

Annual Pay:

Years of Service to Valuation Date

Age:

Service:

Averages_____________________

Valuation Data as of July 1, 2017 Schedule H: Participants Summary


Active Participants July 1, 2016 July 1, 2017

Number of Actives 5 3

Total Annual Pay $195,341 $122,667

Average Age 34.9 32.5

Average Service 5.4 8.7

Inactive Participants

Type No. Annual Benefit No. Annual Benefit

Retirees 3 $55,225 3 $56,768

Survivors 1 $12,463 1 $13,324

Disabled Members 0 $0 0 $0

Deferred Vested

Members0 $0 0 $0

July 1, 2016 July 1, 2017

SECTION V

ACTUARIAL ASSUMPTIONS AND METHODS

Actuarial Assumptions and Methods Used in the Valuation as of July 1, 2017

City of Weston Policemen’s Pension and Relief Fund V‐1

Discount Rate The following table outlines the factors used to determine the discount rate:

Funded Ratio as of

Valuation Date 1

Liquidity Ratio 2

Equity Exposure 3

Projected Funded Ratio after 15 Years 1

Discount Rate

60% or more 10 50% or more 70% or more 6.5%



15% or more 4 n/a 40% or more 5.0%

Less than 15% n/a n/a 15% or more 4.5%

Less than 15% n/a n/a Less than 15% 4.0%

1Funded ratios based on a 6.0% investment return assumption for plans using an actuarially sound policy (standard or optional) and a 5.5% investment return assumption for other plans (alternative or conservation).

2Liquidity ratio equals assets as of the actuarial valuation date divided by expected benefit payments for the year.

3Based on investment policy.

As of June 30, 2017

Assets $1,302,067

Liabilities using a 6.00% discount rate $1,489,741

Funded Ratio 87%

Expected Benefit Payments $72,461

Liquidity Ratio 17.97

Equity Exposure 44%

Projected Funded Ratio after 15 years 100%

Discount Rate

6.00%

Actuarial Assumptions and Methods Used in the Valuation as of July 1, 2017 (Continued)


The premium tax allocation is projected using the following methodology:

(1) The Base Allocation for all Pension and Relief Funds is a fixed amount equal to

$8,709,689 in all future years. This amount is allocated to each individual Pension

and Relief Fund in proportion to the number of eligible members, which includes

active members covered in either the Pension and Relief Fund or the statewide

plan, Municipal Police Officers and Firefighters Retirement System (“MPFRS”).

(2) The Excess Allocation is equal to the excess of the current year premium tax

assigned to all Pension and Relief Funds over the total Base Allocation. This amount

is allocated to each individual Pension and Relief Fund in proportion to the number

of eligible active and retired members covered in either the Pension and Relief Fund

or the MPFRS.

(3) We have assumed all Pension and Relief Funds will make the minimum statutory

contribution requirement and will receive 100% of both the Base Allocation and the

Excess Allocation assigned to the individual plan. Consequently, the projections do

not include any reallocation of Expired Premium Tax Allocation for plan years

beginning on and after July 1, 2019.

(4) The total available premium tax allocation, net of expenses, as of September 1,

2018, includes a Base Allocation of $8,709,689, an Excess Allocation of $9,570,473,

and an Expired Premium Tax Allocation of $237,031.

(5) For the plan year ending June 30, 2018, all Pension and Relief Funds reported a total

of 1,717 eligible active members and 2,165 eligible retired members. The City of

Weston Policemen’s Pension and Relief Fund reported 7 eligible active members

and 4 eligible retired members, based on the average number of plan participants

for the 12‐month period ending June 30, 2018. The Fund is eligible to receive a

premium tax allocation of $61,409 for the fiscal year ending June 30, 2019.

(6) The total premium tax allocation was assumed to increase by 2.75% in calendar

years ending on and after 2019.



General Inflation 2.75%

Expected Salary Increase Service‐based Increase:

General Inflation: 2.75% plus Wage Inflation increment: 1.00% plus Years of Service Increase

1 20.00% 2 6.50% 3 3.50% 4 2.75% 5‐9 2.50% 10‐29 2.00% 30‐34 1.25%

after 34 years of service 0.00%

Post‐retirement COLA

2.75% on first $15,000 of Annual Benefit and on the accumulated supplemental pension amounts for prior years. Assumed to be payable to all members receiving payments.

Increase in State Insurance Premium Tax Allocation

2.75% on and after year 1

Cost Method Entry‐Age‐Normal, Level‐Percentage‐of‐Pay

Amortization Policies: Alternative Plans and former Alternative Plans that selected the Conservation Policy Standard Plans and former Standard Plans that selected the Optional Policy Former Alternative Plans that selected the Optional Policy

For GASB 67/68 Accounting: 30 – Year Closed Level‐Percentage‐of‐Pay Amortization (from July 1, 2010 – 23 years remaining as of July 1, 2017). For funding and GASB 67/68 Accounting: 40‐Year Closed Level‐Dollar Amortization (from July 1, 1991 – 14 years remaining as of July 1, 2017) For funding: 40‐Year Closed Level‐Dollar Amortization (from January 1, 2010 – 32.5 years remaining as of July 1, 2017). For GASB 67/68 Accounting: 30‐Year Closed Level‐Percentage‐of‐Pay Amortization (from July 1, 2010 – 23 years remaining as of July 1, 2017)



Asset Method Market Value

Turnover

Sample Rates – Age Rates

25 9% 35 4% 45 2% 50 0%

Retirement

Age Ratesa

50 45% 51‐55 30% 56‐59 35% 60 100% aTerminated vested participants are assumed to retire at age 50.

Mortality

Active: RP‐2014 Blue Collar Healthy Employeeb Post‐Retirement: RP‐2014 Blue Collar Healthy Annuitant Disabled: RP‐2014 Blue Collar Healthy Annuitant set forward four years Tables above incorporate generational mortality improvement using MP‐2014 2‐dimensional mortality improvement scales. bAssumes 10% of deaths are duty‐related and 90% are non‐duty related.

Disability

Sample Rates – Age Ratesc

30 0.22% 40 0.50% 50 0.79%

c Assumes 60% duty related and 40% non‐duty related. Also assumes 10% of non‐duty disabled members receive a 20% reduction in benefits due to gainful employment.

Percent Married 90%

Spouse Age Females three years younger than males



Administrative Expenses The sponsor did not appear to provide separate investment and administrative expenses. Plan year 2018 administrative expenses assumed to be equal to 15% of all reported 2017 expenses. Future expenses assumed to increase by the general inflation assumption.

Refunds Paid Assumes non‐vested inactive members as of July1, 2017, with accumulated member contribution balances will receive a refund of their contributions during plan year end June 30, 2018.

Data Adjustments and Assumptions None

Child Beneficiaries Future survivor widow benefits are loaded by 12% to estimate impact of benefits provided to survivor children. The load assumes 90% of members are married with two children at time of death, and benefits for each child are paid for approximately eight years.

General Projection Methodology Closed group projections assume: (i) Salaries will increase and members will

decrement as specified in the actuarial assumption section.

(ii) Assets grow at the assumed rate of return.(iii) The sponsor makes the statutory required

contribution on a timely basis. (iv) Non‐vested members with accumulated

plan balances as of July 1, 2017, will receive a refund during plan year end June 30, 2018.

Decrement Timing Mid‐Year

SECTION VI

SUMMARY OF PRINCIPAL PLAN PROVISIONS

Summary of Principal Plan Provisions

City of Weston Policemen’s Pension and Relief Fund VI‐1

Employee Eligibility — All compensated employees of the Police Department hired before January 5, 2015, are eligible to participate in the Policemen’s Pension and Relief Fund. Average Annual Compensation — The average of any three 12‐consecutive‐month periods of employment which produces the highest average annual compensation.

Each 12‐consecutive‐month annual compensation is limited to 120% of the Average Adjusted Salary received by the member in the two consecutive 12‐consecutive‐month periods immediately preceding the 12‐consecutive‐month period used in determining benefits.

The Average Adjusted Salary is base salary (exclusive of all overtime and other pay) of the year used in determining benefits multiplied by the ratio of total salary (includes all overtime and other pay) to base salary from the respective preceding 12‐consecutive‐month period.

Determining Years of Service Credit (Credited Service) — The number of years that the member has contributed to the employees retirement and benefit fund.

Prior Military Service — A city may provide that members who have been honorably discharged from the military shall receive up to two years prior service credit for military service prior to their employment with the city.

Current Military Service — Any current member who has been on qualified military service in the armed forces of the United States with an honorable discharge may, within six months from his or her date of discharge, be given credit for continuous service in the paid police or fire department.

Any member who has served in active duty with the armed forces of the United States, whether prior to or subsequent to becoming a member of a paid police or fire department, shall receive one additional percent for each year so served in active military duty, up to a maximum of four additional percent.

Absence from the service because of sickness or injury for a period of two years or less shall not be construed as time out of service.

Contributions — Participating employees contribute 7.0% of compensation. Participating employees hired on or after January 1, 2010, contribute 9.5% of pay. The municipality has elected to contribute the minimum employer contribution under the Optional funding policy. Normal Retirement — Members are eligible at the earlier of age 50 with 20 years of credited service or age 65. Benefit Commencement — Annual retirement pension benefits commence upon retirement or upon the member attaining age fifty, whichever is later, payable in 12 monthly installments.

Summary of Principal Plan Provisions (Continued)

City of Weston Policemen’s Pension and Relief Fund VI‐2

Accrued Benefit — The annual retirement benefit equals 60% of average annual compensation, not less than $6,000, plus an additional percentage of average annual compensation for service over 20 years equal to 2% for each year of service between 20 and 25 and 1% for each year of service between 25 and 30 years. Employees serving in the military are eligible for an additional 1% of average annual compensation for each year of military service up to four years. The maximum benefit is limited to 75% of average annual compensation. Benefits continue for life. Disability Retirement — Members are eligible after earning five years of service. No service requirement if disability is service related. The monthly disability benefit equals the greater of 60% of monthly salary at disability or $500. Employees serving in the military are eligible for an additional benefit of 1% of monthly salary at disability for each year of military service up to four years. Disability benefits, when aggregated with monthly state workers compensation benefits, shall not exceed 100% of the member’s monthly compensation at the time of disability. Benefits continue for life or until recovery. Death Benefits — Members are eligible after earning five years of service. No service requirement if death is service related. Retirees and terminated vested participants are also eligible. The benefit is equal to 60% of the participant’s benefit, but not less than $300 per month, payable to the spouse until death or remarriage. Other dependents (children, parents, brothers and sisters) are also eligible for death benefits. To each dependent child, 20 percent of the participant’s benefit until the child attains 18 or marries; to each dependent orphaned child, 25 percent of the participant’s benefit until the child attains 18 or marries; to each dependent parent, 10 percent of the participant’s benefit for life, and to each dependent brother or sister, the sum of 50 dollars per month (but a total not to exceed $100 per month) until such individual attains the age of 18 years or marries. In no case shall the payments to the surviving spouse and children be reduced below 65 percent of the total amount paid to all dependents. Supplemental Pension Benefits — All retirees, surviving beneficiaries and disability pensioners are eligible for automatic cost‐of‐living benefits commencing on the first day of July following two years of retirement. The benefits equal the percentage increase in the Consumer Price Index, limited to 4% (2% for some disability retirees), multiplied by the sum of the allowable amount which is the first $15,000 of the total annual benefits paid and the accumulated supplemental pension amounts for prior years. Termination Benefits — Any member who terminates employment prior to retirement will be entitled to a refund of contributions without interest. Refunds — Any member who terminates from their department without receiving a retirement pension shall be refunded all deductions made from his salary, without interest.